David LIn, is the research and developement manager, working in one of the many clean rooms where they manufacture their LED arrays. Bridgelux, on Wednesday Sept. 15, 2010, in Livermore, Calif., which manufactures LED arrays, solid state devices akin to semiconductor chips, is the first such manufacturing plant to open in some 20 years.

Photo: Michael Macor, The Chronicle

David LIn, is the research and developement manager, working in one...

Image 2 of 3

A display of the various LED arrays that Bridgelux manufactures. Bridgelux, on Wednesday Sept. 15, 2010, in Livermore, Calif., which manufactures LED arrays, solid state devices akin to semiconductor chips, is the first such manufacturing plant to open in some 20 years.

Photo: Michael Macor, The Chronicle

A display of the various LED arrays that Bridgelux manufactures....

Image 3 of 3

Annika Larsson, sales developement engineer, holds a pendent lamp that uses their company's LED arrays. Bridgelux, on Wednesday Sept. 15, 2010, in Livermore, Calif., which manufactures LED arrays, solid state devices akin to semiconductor chips, is the first such manufacturing plant to open in some 20 years. (The halo around the lamp is lens flare from the camera.)

"Third time's the charm" could be the motto for the semiconductor factory being christened today in Livermore, bringing 200 jobs and a $3.6 million-a-month payroll to a region hungry for work.

Bridgelux, the clean-tech startup showing off its new state-of-the-art facility, said the Livermore site offered the fastest, cheapest way for it to ramp up production of solid-state lights - an energy-saving alternative to incandescent and compact fluorescent bulbs.

How did a Bay Area factory become the low-cost location?

By being an industrial hand-me-down, said Bridgelux chief executive Bill Watkins. He said the factory was built a decade ago by one local tech firm that never used it, but instead sold it to a second local firm that also mothballed the plant - creating an opportunity for Bridgelux to move in cheaply and quickly.

"It was a very good deal that allowed us to save upwards of $20 million this year," Watkins said.

In a region accustomed to losing manufacturing jobs, this plant christening serves as a reminder of how tough it is for the Bay Area to compete.

Even now, as Bridgelux churns out LED lights for industrial applications such as traffic signals and street lamps, Watkins said he must soon decide where to add production capacity to meet the demand he expects two years hence.

Right now, unless there's another mothballed factory sitting idle somewhere, Watkins said he's likely to expand in Asia, where he can enjoy lower labor costs and - in China - government subsidies for locating production there.

'Made in California' tactic

"They say, 'Look, you put your jobs here, and we'll help you fund it,' " said Watkins, who has an idea for how California or some of its cities can get back into the game when it comes to attracting new clean-tech factories.

In essence, Watkins said the state or city governments could float revenue bonds that municipalities would use to buy LED lights - provided that at least 60 percent of the product is manufactured here.

"This is what China has done," Watkins said, explaining how Chinese authorities have used the purchasing power of their municipal governments to create a demand for LEDs - which are still more expensive than ordinary lights on the initial purchase, but so energy efficient that they can pay back the differential in lower electric bills over time.

Watkins said China also slapped a 20 percent tariff on incoming LEDs. This carrot-and-stick program - subsidies to build factories in China and penalties for those who build elsewhere - has created 55 Chinese-based LED manufacturing companies, he said.

A "made in California" approach would obviously benefit his firm, but Watkins said it would also attract Chinese companies interested in cracking the U.S. market.

"My competitors would come to the U.S. to build the business," he said.

Intellectual power source

Factory wins for the region are rare. One high-tech company with a local manufacturing story is Infinera.

The Sunnyvale firm makes an entirely new type of chip designed to transmit the pulses of light through the fiber optic cables that comprise the Internet.

Infinera co-founder Dave Welch said when the company opened its Sunnyvale plant in 2002, it located here because its technology was at the cutting edge - unlike most silicon-based chips, Infinera uses different compounds that required it to reinvent many basic processes.

"We built here primarily because the intellectual power exists here to pull off that technology," Welch said.

Following China's example

Now the 600-person company is in the throes of deciding whether to expand its Sunnyvale site or build a second production plant elsewhere.

"The high probability is we'll do it here," said Welch, although Maryland and New Jersey are competitive because they, too, have labor pools experienced in photonics, the field at the heart of Infinera's technology.

Tesla, the electric car startup, also plans to position production locally, after getting a great deal on the auto plant that General Motors and Toyota shut down in Fremont.

Solyndra, the solar energy startup that won a $535 million federal loan guarantee, also has opened a new plant in Fremont, where city officials went out of their way to streamline the permitting processes, according to spokesman Dave Miller.

But while the Bay Area enjoys periodic wins, Watkins said it has not yet followed China's example in using the domestic market to both create demand and make it economical for U.S. startups or foreign firms to build here.

"You need a '60 percent made in America' deal," Watkins said. "If we can't do that as a country, or as a state, or as cities, then forget it - we can't grow businesses here."